Chevron concentrates on deepwater operations

Steve Conner, general manager of operations for Chevron's Gulf of Mexico business unit, said with increased efficiency and refined processes, deepwater offshore projects will continue to grow and provide energy for the U.S. and the rest of the world.

"I'm proud of our 80-year history in the Gulf of Mexico, proud of what we've accomplished here in the states," Conner said. "We've used innovation to grow U.S. onshore and offshore production to show that America has the technology and ingenuity to significantly reduce reliance on imported oil. Chevron and other companies fill a very important role in providing affordable and reliable energy to people all around the world."

Steve Conner, general manager of operations for Chevron's Gulf of Mexico business unit.

Over the next 25 years, the world population is expected to rise from 7.5 billion to 9 billion, Conner said at the Energy Summit 2018 held recently at Louisiana State University in Baton Rouge, citing another summit presenter, Raphael Bostic, president of Federal Reserve Bank of Atlanta.

"The world needs affordable, reliable and ever-cleaner energy to enable human progress for everyone," he stated, adding that demand for energy will be 25-percent higher by the year 2040. "So where will those resources come from? A good many of them [will come] right from the United States -- and a good many of those from the Gulf of Mexico deepwater."

Advancing technologies have helped increase overall operations efficiency, Conner explained, and this has allowed for deepwater production to flourish. Whereas the Outer Continental Shelf (OCS) is dominated by gas and has remained a significant resource for the U.S., the deepwater Gulf of Mexico -- which has "oilier" sediments -- has grown significantly in only the past five to 10 years, he said.

"You see that 2017 was a record year of oil production from the Gulf of Mexico," Conner said. As a testament to that record production, in 2018, Chevron will have invested $8 billion in U.S. exploration and production, he added.

According to Wood Mackenzie, Conner said, the total investment in 2018 may be about $10 billion, and over the next few years, that could increase to about $10 billion to $13 billion a year being invested in the deepwater Gulf.

In the past five to 10 years at Chevron, the company's focus has shifted to a primary effort on deepwater operations. Conner said the company has been happy with the results of deepwater operations as well as the general work being conducted. Currently one of the largest leaseholders in the Gulf of Mexico, Chevron averaged 165,000 bpd of crude and 122 million standard cubic feet of gas in 2017.

Updated technologies such as seismic acquisition and subsea boost pumps have helped deepwater operations to grow and become more efficient over time. This improved technology has also helped reduce costs for these expensive projects, meaning more can be done than ever before.

"In the Gulf of Mexico, we at Chevron [have] improved our drilling days per 10,000 feet by 35 percent in relation to 2014," Conner explained. "We've reduced our completion time by more than 40 percent. And we've reduced our operating costs -- or our lifting costs -- by 50 percent by just being more clever, by applying a lot of technology."

Overall, as long as technology continues to progress and make operations easier, more money will be invested in deepwater, which means another reliable energy source will be globally available. "So you see, now that we've all been learning about the deepwater, we can now conceptualize how we do it more efficiently," he said. "What that's going to do is drive our development costs down, which is going to make more resource available and make the basin more available to us."